Region Group · ASX:RGN
Region — SCA Property Group — FY2015 Earnings Presentation
41 slides from Region's earnings presentation, Aug 17, 2015
Slide 1: SCA Property Group FY15 Results Presentation
For personal use only SCA PROPERTY GROUP FY15 Results Presentation 17 August 2015 Whitsunday, QLD
Slide 2: Agenda
AGENDA For personal use only 1 Overview of FY15 Results 2 Financial Performance 3 Operational Performance 4 Growth Initiatives 5 Key Priorities and Outlook 6 Questions 7 Appendices 2
Slide 3: Overview of FY15 Results
For personal use only 1 OVERVIEW OF FY15 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: FY15 Highlights
FY15 HIGHLIGHTS For personal use only Financial Capital Active Portfolio Performance Management Management $150.5m, up by 34.9% 33.3% 98.9% 3.9% Statutory net profit after tax 1 Gearing 3, within 30 – 40% target range Portfolio occupancy 6 Specialty vacancy 6 $80.1m, up by 14.8% $1.77, up by 7.9% 7.
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY For personal use only • Normalised level of specialty vacancy achieved – now 3.9% of specialty GLA (down from 8.6% as at 30 June 2014) Optimising the • Specialty rent per square metre increased to $650/sqm as at 30 June 2015 (up from $630/sqm as at Core Busi
Slide 6: Financial Performance
For personal use only 2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer
Slide 7: Statutory Profit & Loss
STATUTORY PROFIT & LOSS For the Year Ended 30 June 2015 For personal use only • Statutory net profit after tax of $150.5m, up by 34.9% on the prior year $m FY15 FY14 % Change Anchor rental income 106.6 95.9 11.2% • Net operating income up by 9.3%, driven by acquisitions, specialty Specialty rental i
Slide 8: Distributable Earnings, FFO, AFFO
DISTRIBUTABLE EARNINGS, FFO, AFFO For the Year Ended 30 June 2015 For personal use only $m FY15 FY14 % Change • Funds From Operations of $80.1m is up by 14.8% on the same Net profit after tax (statutory) 150.5 111.6 34.9% period last year Reverse: Straight lining & amortisation of (4.4) (7.5) (41.3%
Slide 9: Balance Sheet
BALANCE SHEET As at 30 June 2015 For personal use only • Value of investment properties increased by $254.6m since 30 30 June 30 June % Change June 2014, predominately due to acquisitions (less divestments) $m 2015 2014 and positive revaluations (see slide 32). Investment property Cash 3.7 0.9 311%
Slide 10: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 30 June 2015 For personal use only 30 June 30 June • Gearing of 33.3%(1) is within target range of 30% to 40% $m 2015 2014 • We have fixed interest rate hedges in place for 65% of our Facility limit (2) 804.8 600.0 drawn debt as at 30 June 2015 Drawn debt (net of ca
Slide 11: Operational Performance
For personal use only 3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 12: Portfolio Overview
PORTFOLIO OVERVIEW For personal use only Assets Number of Number of GLA Occupancy Value Weighted average As at 30 June 2015 centres specialties (sqm) (% GLA) (A$m) WALE (yrs) cap rate (%) Freestanding 10 - 45,051 100.0% 161.4 18.6 7.48 Neighbourhood 59 643 313,828 98.9% 1,211.6 11.6 7.46 Sub-regiona
Slide 13: Sales Growth
SALES GROWTH SCP’s Australian supermarket sales growth is slowing For personal use only Supermarkets Sales Growth (%) 10.0% • Moderating Australian supermarket sales growth 8.9% 8.4% due to: 8.0% 6.7% – Maturing of IPO portfolio (MAT sales growth of 6.0% 5.9% 6.2% 6.0% 2.5%) 6.0% SCP NZ 6.2% 5.2% Co
Slide 14: Turnover Rent
TURNOVER RENT For personal use only Current Sales as % of Turnover Threshold (1) • Our turnover rent is increasing off a low base, with 14 3 Supermarkets anchors in turnover rent at 30 June 2015 (12 < 50% 12 Supermarkets supermarkets and 2 Kmarts) up from 8 as at 30 June > 100% 2014 50% - 75% 6 Supe
Slide 15: Portfolio Occupancy
PORTFOLIO OCCUPANCY Portfolio occupancy is 98.9% For personal use only Portfolio Occupancy (% of GLA) • Portfolio occupancy is at 98.9% (1) of GLA – Specialty vacancy is within the normalised 100.0 target range of 3% - 5% 98.9% 99.0 98.6% • During FY15, 114 leases commenced 98.0 97.8% 97.1% • The sp
Slide 16: Specialty Key Metrics
SPECIALTY KEY METRICS Positive rent reversions are expected to continue For personal use only • Specialty sales continue to grow strongly, driven mainly Australian specialty tenants open for > 24 months by non-discretionary spend FY14 FY15 • Average specialty occupancy cost (gross rent as a percenta
Slide 17: Growth Initiatives
For personal use only 4 GROWTH INITIATIVES Anthony Mellowes Chief Executive Officer
Slide 18: Active Portfolio Management
ACTIVE PORTFOLIO MANAGEMENT Five new acquisitions in the six months to 30 June 2015 For personal use only Mt Warren Park (Brisbane) Glenorchy Central (Hobart) • Acquisition completed in April 2015 for • Acquisition completed in June 2015 for $14.4m (6.97% implied cap rate) $21.0m (7.66% implied cap
Slide 19: Neighbourhood Centres in Australia
NEIGHBOURHOOD CENTRES IN AUSTRALIA Fragmented ownership provides acquisition opportunities For personal use only Neighbourhood centre landscape in Australia Ownership of neighbourhood centres in Australia (Number of centres) SCP • There are over 850 Coles and Woolworths anchored CQR Indicative FDC n
Slide 20: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE We have identified over $100m of development opportunities at 16 of our centres over the next 5 years (1) For personal use only Development Type Centre (s) Estimated Capital Investment (A$m) FY16 FY17 FY18 FY19 FY20 Stage 3 (third anchor) Kwinana 5.0 10.0 - - - Centre
Slide 21: Funds Management Business
FUNDS MANAGEMENT BUSINESS Potential to deliver additional earnings growth in the future For personal use only • First fund “SURF 1” launched – Five SCP non-core assets to be acquired for $60.9m, a 12% premium to book value as at 31 December 2014. Sale price was based on an independent valuation from
Slide 22: Key Priorities and Outlook
For personal use only 5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes Chief Executive Officer Mark Fleming Chief Financial Officer
Slide 23: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure distributions For personal use only Focus on convenience- Weighted to non-discretionary Long leases to quality anchor based retail centres retail segments tenants Appropriate capital Growth structure opportunities 23
Slide 24: Stable Platform in Place
STABLE PLATFORM IN PLACE We are well positioned to deliver on our strategy For personal use only Lay Foundations Stabilise Optimise and Grow FY13-FY14 FY15-FY16 FY17+ • Establish team • Stabilise sustainable tenancy • Specialty rent renewal cycle to • Reduce specialty vacancy mix increase rent/sqm C
Slide 25: Strong Returns Delivered
STRONG RETURNS DELIVERED SCP’s total return has exceeded market benchmarks For personal use only • SCP has delivered unitholders a total return FY15 Total Return (1) Cumulative Total Return since IPO (1) (distributions plus unit price appreciation) of over 30% during FY15, and over 70% since listing
Slide 26: Potential Earnings Growth Trends
POTENTIAL EARNINGS GROWTH TRENDS Continued solid earnings growth expected over time For personal use only Indicative Contribution to FFO Description and Assumptions Growth Rate (% pa) (from FY17 onwards) • Anchor rental income represents about 60% of overall gross property income Anchor Rental • Onc
Slide 27: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY16 For personal use only Optimising the Core • Increase specialty rent per sqm by optimising tenancy mix and achieving rental uplifts on Business renewals • Improve centre standards by reinvesting expense savings and reviewing property
Slide 28: Questions
For personal use only 6 QUESTIONS
Slide 29: Appendices
For personal use only 7 APPENDICES
Slide 30: Long Term Leases to Woolworths and Wesfarmers Group
LONG TERM LEASES TO WOOLWORTHS AND WESFARMERS GROUP For personal use only Overall Lease Expiry (% of gross rent) • 61% of gross rent generated by Woolworths (54%) and 55.6% Wesfarmers Group (7%) (on a fully leased basis), with an Anchor WALE of 15.6 years • Opportunity to realise positive rent rever
Slide 31: Specialty Vacancy
SPECIALTY VACANCY Normalised vacancy levels achieved For personal use only Specialty Vacancy (% of Specialty GLA) 19.2% Kwinana, 5.3% 14.0% Margaret River, 1.1% Mt Gambier, 1.7% Murray Bridge, 1.4% Kwinana, 2.5% 11.1% Margaret River, 0.8% Treendale, 1.5% Mt Gambier, 1.4% Kwinana, 1.9% 8.6% Treendale
Slide 32: Investment Properties Value
INVESTMENT PROPERTIES VALUE For personal use only 16.0 67.9 256.8 (60.9) 1,895.4 (16.2) (9.0) A$m 1,640.8 30-Jun-14 Acquisitions Fair Value Straight lining & capex Assets Held for Sale Disposals FX 30-Jun-15 • Acquisitions of $233.1m, being Mt Warren ($14.4m), Prospect Vale ($26.8m), Burnie Plaza ($
Slide 33: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING For personal use only Debt Facilities as at 30 June 2015 Facility Limit Drawn Debt Undrawn Maturity $m (A$m) (A$m) (A$m) Bank Facilities Bank bilateral (1) 175.0 85.0 90.0 Nov – Dec 2017 Bank bilateral 215.0 158.3 56.7 Nov – Dec 2018 Bank bilateral 30.0 30.0 0
Slide 34: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Twelve months to 30 June 2015 For personal use only Specialty Total purchase Implied Acquisition Anchor Total GLA % GLA Centre type GLA price Acquisition date GLA (sqm) (sqm) committed (sqm) ($m) Cap rate Woolworths Completed Centres Greystanes, NSW (1) Neighbourhood O
Slide 35: Divestments During the Period
DIVESTMENTS DURING THE PERIOD Twelve months to 30 June 2015 For personal use only Anchor Specialty Total sale Completion Total GLA % GLA Divestment Centre type GLA GLA price date (sqm) committed Cap rate (sqm) (sqm) ($m) Divested Properties Margaret River, WA Neighbourhood June 2013 3,824 1,906 5,73
Slide 36: Anchor Tenants
ANCHOR TENANTS Increasing exposure to Wesfarmers Limited For personal use only 11 December 30 June 30 June 30 June 2012 2013 2014 2015 • All of our centres are anchored by either Woolworths Limited Woolworths Limited or Wesfarmers Limited Woolworths 40 50 51 53 retailers Big W 8 8 9 9 Dan Murphy’s 5
Slide 37: Portfolio List
PORTFOLIO LIST For personal use only WALE Valuation Completion Total GLA Occupancy Number of Valuation Property State Property Type Anchor Tenant(s) (Years by Jun-15 Date (sqm) (% by GLA) Specialties Cap Rate GLA) (A$m) Australia Lilydale VIC Sub-Regional WOW; Big W Jul-13 22,066 99% 55 14.3 7.00% 8
Slide 38: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only WALE Valuation Completion Total GLA Occupancy Number of Valuation Property State Property Type Anchor Tenant(s) (Years by Jun-15 Date (sqm) (% by GLA) Specialties Cap Rate GLA) (A$m) Australia Ayr QLD Neighbourhood Coles Jan-00 5,513 98% 9 9.3 7.50% 1
Slide 39: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only WALE Valuation Completion Total GLA Occupancy Number of Valuation Property State Property Type Anchor Tenant(s) (Years by Jun-15 Date (sqm) (% by GLA) Specialties Cap Rate GLA) (A$m) New Zealand Kelvin Grove NZ Neighbourhood Countdown Jun-12 3,611 100
Slide 40: Management Team
MANAGEMENT TEAM For personal use only Anthony Mellowes, Chief Executive Officer Campbell Aitken, Chief Investment Officer • Mr Mellowes is an experienced property executive. Prior to joining SCA • Mr Aitken has over 10 years experience working in the Property Funds Property Group as an Executive Dir
Slide 41: SCA Property Group
SCA Property Group For personal use only Level 5, 50 Pitt Street Sydney NSW 2000 Tel: (02) 8243 4900 Fax: (02) 8243 4999 www.scaproperty.com.au Disclaimer This presentation has been prepared by Shopping Centres Australasia Property Group RE Limited (ABN 47 158 809 851) (SCPRE) as responsible entity